The DC Stipulated Order Analyzed by Lewis Mettler, Esq. & the Order- as text

Sunday, December 26 2004 @ 03:30 PM EST

I asked Lewis Mettler, Esq., of Lamlaw, who is both an attorney and a software developer, if he'd share with us his analysis of the SCO v. DaimlerChrysler Stipulated Order of Dismissal Without Prejudice. He was kind enough to agree. He has spotted some interesting elements, as you will see, and also gives his opinion on what he considers likely to happen next.

Of course, predicting SCO is a hazardous task, because they do not always behave like normal litigants. He analyzes from the perspective of what would typically be likely to happen next, including any appeal and any conceivable settlement negotiations. Looking at it from that angle, he feels it makes little practical sense for them to appeal. I hold more to the thought that they pretty much have to file an appeal on their earlier loss, if they wish to preserve any hope of suing any more of the 1500 companies they sent a certification letter to, and the related illusion that there's gold in them thar hills, and because an appeal makes it possible to save face now. Also, they've said they will appeal and I can't see how they can back down now, without looking foolish. We'll just have to wait and see. We'll know soon, because I believe there is a relatively short deadline to file an appeal.

One thing we do not disagree on: the ultimate outcome, whether they appeal or not. I am guessing if we gave SCO's attorneys truth serum, they'd agree with us both, that this DC lawsuit was a doomed adventure, best never started in the first place. It was an embarrassing rout. There is no smaller word that would fit what happened in this strange case. Why they picked DC as their target is one of those mysteries that make the SCO saga never boring to contemplate.

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The Stipulated Order of Dismissal Without Prejudice, An Analysis,
~ by Lewis A. Mettler, Esq.

We now have the Stipulated Order of Dismissal without Prejudice in the
SCO vs. Daimler Chrysler case.

It is pretty much as expected from the early reports but it also has
some inconsistencies that could make for some additional games, should
SCO decide to refile the case.

First, you need to understand just what the phrase "without prejudice"
means. Simply put, it means that the case is dropped for now, but
if SCO wanted to bring the action again, it can do so. "With
prejudice" would mean that SCO would be barred from bringing the same
legal issues up again before the court. Typically when two
parties agree to a dismissal, it is without prejudice. For one,
the defendant is pleased to get it dismissed, regardless of terms.
And two, the plaintiff is willing to let it slip by if they have the
option of bringing the action again later. So, as in this
situation, the case does go away. Indeed the last sentence states
that "this closes the case".

Well, it does close this particular Civil Action No.
04-056587-CKB. But, of course, a new filing by SCO would just
qualify for a new case number, and we could be debating once again
whether after 7 years of not using SCO software, Daimler-Chrysler was
derelict in not responding to SCO fast enough to certify compliance.

Of course, this whole issue was a pretty silly reason for suing anyone,
much less a major corporation. But SCO just had to cause somewhat
of a stink and claim it had something to do with Linux. And, yes
it was related to Linux, but not as far as any legal issue was
concerned. SCO never did allege any copyright violations against
DCC. Rather it was all based upon the claim that DCC did not
certify it hadn't helped Linux in some way. The issues that SCO may
have wanted the case to be about never materialized. The court
even dismissed the allegations that the certification was somehow
insufficient in light of SCO's increased demands regarding Linux.
And since the only legal issue surviving the court's dismissal was
related to the timeliness of the response, there was really very little
to be concerned about.

The court's dismissal was with prejudice. Those issues are
decided. Unless of course, SCO decides to appeal that earlier
dismissal.

SCO could still appeal that decision. And they may do so.
But my guess is that they will let it die. If so, it would be for
practical reasons. Setting aside the question of whether SCO
lawyers want to appeal the earlier court decision while their legal
fees are capped, the real issue may be one of timing or even value.

I personally concluded a long time ago that SCO only brought the legal
action against DCC in order to put indirect pressure upon IBM and
others. And perhaps to help extort some money from other Linux
customers that might want to stay out of extended litigation in regard
to Linux, even if the charges are bogus or trumped up. But now I
assume that SCO has their hands full with the IBM, Red Hat and even
AutoZone cases. Also take into account the fact that any
legal grounds for appealing the court's DCC dismissal are weak at
best. And it would only really help SCO if the appeal occurred
before SCO and IBM may have to sit down and seriously consider a
settlement.

Normally in cases like this (i.e., the IBM case), serious discussion
regarding a settlement only really take place after all motions for
Summary Judgment have been exhausted. Or at least that is the
situation when the defendant is the party filing all of the motions for
Summary Judgment. In other words, should it become clear that the
SCO vs. IBM case will not go away with Summary Judgments in IBM's
favor, then IBM might be encouraged to reach a settlement with SCO to
avoid that so-called dreaded jury trial. You know, the one that
is supposed to grant to SCO that $5 billion dollar award. Well,
it is during that negotiation that having the DCC case still pending
would be of some value to SCO. And of course, SCO would have to
be successful at that appeal in order to recover even that marginal
value.

My guess is that it is just not worth it to SCO. If SCO loses one
or more of those Partial Summary Judgments, the DCC case will not mean
anything anyway. And it may be that if IBM wins even just one of
those judgments, the DCC case would be of little value.

And it may be that if SCO is able to squeak by all those motions for
Partial Summary Judgment, it may be too late to file notice of appeal
in the DCC case anyway. The point here is that we are not very
close to having those Summary Judgment motions decided. And even
SCO is attempting by any means it can to delay that process as long as
possible. And the more SCO can delay, the more likely that it will be
too late to appeal the DCC decision. Thus said, SCO would have to
decide now to file their appeal. But that costs money. Fees
are capped apparently. And to be honest the value to SCO is
questionable anyway. Of course, the whole idea was to have the
DCC case get a snow ball rolling. But the DCC case has melted.

And now for the slight ambiguity in the order itself.

IT IS FURTHER ORDERED that, in the
event Plaintiff The SCO Group, Inc. refiles its
claim for breach of contract for Defendant DaimlerChrysler
Corporation's alleged failure
to respond to the request for certification in a timely manner, Plaintiff shall
pay
Defendant's costs and reasonable attorneys' fees incurred in the
instant action in
defending against that claim only [emphasis added], from and
after the entry of this Court's August 9, 2004
Order Granting in Part and Denying in Part Defendant DaimlerChrysler
Corporation's
Motion for Summary Disposition, as a condition precedent to pursuing
any such refiled
action.

At first reading this would tend to suggest SCO has agreed to pay only
those fees related to the sole remaining issue and then only those fees
incurred after the case was so narrowed to leave it as the only
issue. Of course, without having the billing records for DCC, it
is hard to judge just how much legal time DCC lawyers have spent on
that last remaining issue. It is likely that it is minimal anyway,
simply because DCC could have rightly assumed that this case was going
to be either dismissed in the fashion that has come about or would be
appealed. After all, this was not a major legal issue. The
case was properly gutted and was only waiting for this final dismissal
anyway. This was a Mickey Mouse case to begin with. And SCO was
left holding only a disconnected "tail of the mouse".

The order does say that SCO must pay those costs as a condition
precedent to SCO pursuing any such refiled action. I guess the
order is just not drafted quite correctly. It is clear what is
meant, but it reads a bit strange.

A "condition precedent" is an event that must occur first before a subsequent duty or
obligation is owed; or a right is initiated. By the wording of
the order, SCO would have to pay the legal fees before filing a renewed
law suit. But the order also says that DCC just would not have to
respond or answer until after the court has decided the amount of legal
fees and SCO has paid them.

Well, filing the renewed law suit would have to come first. (No
court will make any decision on an unfiled law suit.) So, SCO
would file their new lawsuit, DCC would run to the courthouse and ask
the court for a decision in regard to the amount of legal fees, if any,
that SCO must pay; and then DCC would be obligated to answer the
complaint or otherwise respond to the issues. Simply put, it is
DCC's obligation to respond that has the condition precedent placed
before it. But the order reads such that the condition precedent occurs
before SCO does anything.

What is the big deal here? We all know what was meant by the
order, right? I think so. But it does just go to show how a
slight error in drafting an agreement can bring up a very strange
situation. A situation that is not likely to ever occur.
And of course, the only reason this discussion has taken place is
because SCO is in court right now arguing with IBM over the precise
terms and meaning of the contract between AT&T and IBM.
So when you have a company like SCO that likes to weasel around with
contracts, you have to be careful or not deal with them at all.

Of course, in this case the judge would know what was meant and just
fly with it. After all when a judge signs something, that same
judge will attribute the meaning to be what the judge thought it meant.
But, you have to keep in mind that it could come before a different
judge who may be limited to the wording of the agreement itself.

In any event, I doubt that SCO will refile this case against DCC.
But you never know. Anyone who has read my comments on these
follies already knows that my opinion is that they should never have
been filed in the first place. None of them. (Unless you
subscribe to the concept of nuisance lawsuits or extortion rackets.)

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STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND
___________________________

At a session of said Court, held in the Oakland County Courthouse in the City of Pontiac, County of Oakland, State of Michigan, on

DEC 21 2004

_____________________

PRESENT: Hon. Rae Lee Chabot, Circuit Court Judge

Upon the stipulation of the parties hereto, through their respective counsel, and the Court being fully advised in the premises;

IT IS HEREBY ORDERED that Plaintiff The SCO Group, Inc.'s claim for breach of contract for Defendant DaimlerChrysler Corporation's alleged failure to respond to the request for certification in a timely manner is DISMISSED without prejudice.

1

IT IS FURTHER ORDERED that, in the event Plaintiff The SCO Group, Inc. refiles its claim for breach of contract for Defendant DaimlerChrysler Corporation's alleged failure to respond to the request for certification in a timely manner, Plaintiff shall pay Defendant's costs and reasonable attorneys' fees incurred in the instant action in defending against that claim only, from and after the entry of this
Court's August 9, 2004 Order Granting in Part and Denying in Part Defendant DaimlerChrysler
Corporation's Motion for Summary Disposition, as a condition precedent to pursuing any such refiled
action. The amount of Defendant's costs and reasonable attorneys' fees shall be determined by the Court in the refiled action as soon as practicable after refiling, and Plaintiff shall pay such costs and reasonable attorneys' fees, as are determined by the Court, within 15 days following the Court's decision, as a condition to pursuing the refiled action. Defendant shall not be required to answer or otherwise respond to the complaint in the refiled action until Plaintiff pays the costs and
reasonable attorneys' fees described above.